2007 (6) TMI 50 - AT - Central Excise

Cenvat/Modvat - In the year of receipt of capital goods the appellants had claimed depreciation in the ITR in respect of each of these capital goods excluding the cenvat credit availed in the corresponding assessment year - Held that appellant claimed is correct and allowed

Summary

Issues:
Claim of wrongly availed Cenvat credit, penalty, and interest due on credit availed.

Analysis:

Issue 1: Claim of wrongly availed Cenvat credit, penalty, and interest due on credit availed

The appellants, M/s. Roots Cast Private Limited Unit II, filed an application for stay of the impugned order, which was taken up for final disposal after dispensing with predeposit. The first appellate authority affirmed the demand of wrongly availed Cenvat credit amounting to Rs. 5,87,523/-, along with penalty and interest. The case involved the appellants receiving consignments of capital goods in the years 2000, 2001, and 2002, and availing Cenvat credit on the duty paid for these goods in the financial year of receipt and subsequent years. The dispute arose regarding the claim of depreciation in the Income Tax return on the value of capital goods excluding the Cenvat credit availed. The appellants argued that Rule 4(4) of the Cenvat Credit Rules, 2002, allowed them to claim depreciation on the value of capital goods, including the unavailed duty credit. They relied on a Tribunal decision supporting their interpretation of the rule. The Tribunal analyzed the case records and found that the appellants had followed the provisions of Rule 4(2)(a) and Rule 4(4) of CCR '02 correctly. It was observed that there was no violation of the Cenvat Credit Rules as the appellants had not claimed Cenvat credit on the portion of duty for which they availed depreciation. Following the precedent set by the Tribunal, the appeal was allowed, setting aside the impugned orders.

In conclusion, the Tribunal ruled in favor of the appellants, allowing their appeal against the demand for wrongly availed Cenvat credit, penalty, and interest. The decision was based on the correct interpretation and application of Rule 4(4) of the Cenvat Credit Rules, 2002, and in line with the findings of a previous Tribunal case. The impugned orders were deemed unsustainable, and the appeals were allowed with consequential relief.